Mining


 

OVERVIEW

India is blessed with the production of 95 minerals– 4 fuel-related minerals; 10 metallic minerals; 23 non-metallic minerals; 3 atomic minerals; and 55 minor minerals (including building and other minerals). Mining is one of the core sectors of Indian economy and acts as a catalyst of growth for major industries like power, steel, cement, etc., which, in turn, are critical for the overall development of the economy. India is the third largest producer of coal and chromite, fourth largest producer of iron & manganese ore and sixth largest producer of bauxite.

Capacity and Production

India accounts for around 8% of world’s iron ore deposits and is also the fourth largest producer globally. The production of coal in India grew from 457.08 million tonnes in FY 08 to 688.78 million tonnes in FY18, registering a CAGR of 4.19%. The production of iron ore increased by 3.27% to reach 200.9 million tonnes in FY18 as compared 194.6 million tonnes in FY17.

The production of crude oil reached 34.2 million tonnes in 2018- 19, a decline of -4.15% as compared to 35.6 million tonnes in 2017-18. The onshore crude oil production dominated with a contribution of 50.68% in the total crude oil production, during 2018-19. However, the production of natural gas during 2018-19 increased to the tune of 0.69%, with 32,873.4 million cubic meters produced in 2018-19 to 32,649.3 million cubic meters, as compared to the previous year.

The IIP for the mining and quarrying industry grew by 2.84% in 2018-19, as compared to previous year growth of 2.31%.

Exports

The exports of iron ore and concentrates reached 16,209 thousand tonnes in 2018-19, a decline of (-) 33.03% from previous year exports of 24,202 thousand tonnes. Aluminum exports from the country grew to 1.95 million tonnes in 2018-19, from 1.66 million tonnes in 2017-18. During 2018-19, 1560 thousand tonnes of Bauxite was exported from India, with China accounting for more than 80% of total exports.

FDI

FDI of upto 100% is allowed under automatic route for the mining and exploration of metal and non-metal ores including diamond, gold, silver and precious ores in India. Under Government route, 100% FDI is allowed in mining and mineral separation of titanium bearing minerals and its ores. FDI of up to 100 % is permitted under the automatic route to explore and exploit all non-fuel and non-atomic minerals and process all metals as well as for metallurgy. In March 2018, the government allowed 100% FDI in coal mining as well.

Mining sector in India accounted for US$ 2531.84 million of FDI, which was 0.60% total FDI inflows, during April 2000 to March 2019.

Outlook

The Metals and Mining sector in India is expected to witness a major reform in the next few years, owing to reforms such as Make in India Campaign, Smart Cities, Rural Electrification and a focus on building renewable energy projects under the National Electricity Policy,2005. According to EY report on Indian Metals and Mining, despite improving competitiveness of renewables and gas-fired technology, coal is likely to remain the dominant source of energy in India till 2035, due to increased availability of domestic coal, sector optimization via regulatory changes and limited gas availability. While expanding solar and wind capacity will cut the share of coal in energy mix in long term, the demand for coal is expected to remain strong.


 

SELECT GOVERNMENT INCENTIVES

Select Government Incentives

  • Mineral blocks are being put up for auctions by the States for Mining or Prospecting cum mining, depending on their level of exploration. The grant process is to be completely transparent through a competitive bidding on an e-auction portal. An Inter-Ministerial Group, Post Auction Mining Clearances and Approvals Facilitator (PAMCAF) was constituted in 2016 for expediting the requisite clearances to enable the early start of mining activity. A total of 166 mineral exploration projects have been approved for National Mineral Exploration Trust (NMET) funding at the cost of INR 52,132.18 lakhs.
  • Ministry of Mines has initiated an endeavor called 100X100 Model VAQ programme with an aim to increase Visibility, to improve Activity and to enhance Quality in various activities of Geological Survey of India (GSI), in order to harness the energy and drive of the middle level officers of GSI for developing programmes implementable within 100-300 days which will have significant impact on VAQ parameters of GSI. Under this program, 125 middle level professionals of GSI were carefully selected, representing different domain expertise as well as all the Regions and State Units of GSI.
  • District Mineral Foundation (DMF) is instituted under Mines and Minerals (Development and Regulation), as non-profit trusts, to work for the interests and benefit of persons/ families affected by mining related operation under the jurisdiction of the relevant State Government. Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) was therefore implemented to distribute these funds generated by DMF.